The short answer
Interchange is the fee the card network (Visa or Mastercard) requires the acquiring bank to pay the issuing bank on every card transaction. It's set by the network, not by your processor. It's the biggest single cost on almost every merchant statement.
In plain English
When a customer taps their Chase Sapphire at your checkout, the money moves in a loop: customer → Chase (issuer) → Visa (network) → your acquirer (Stripe/Square/etc.) → your bank. At each hop, fees come out. Interchange is the biggest one — it stays with the issuing bank as compensation for funding the transaction, carrying the float, and covering the rewards the customer earns.
Interchange varies by card type, transaction type, and category. A debit card is cheap. A premium rewards credit card used card-not-present at a nutraceutical merchant is expensive.
How it shows up in your business
- Your Stripe statement shows an effective rate around 2.9% + $0.30 — most of that is interchange (usually 1.5–2.2% depending on card mix), with the rest being network assessments and Stripe's margin.
- High-reward cards (Chase Sapphire Reserve, Amex Platinum, etc.) cost more interchange. A portfolio skewed to these costs more per dollar than a portfolio skewed to debit.
- Card-not-present transactions (e-commerce) run higher interchange than card-present because fraud risk is higher.
- Certain MCC codes get preferential interchange (supermarkets, charities, some utilities). Most e-commerce doesn't.
Numbers to know
For a typical US credit card e-commerce transaction, interchange runs 1.65% + $0.10 on low-end credit cards to 2.60% + $0.10 on premium rewards cards. Debit interchange is capped by the Durbin Amendment at $0.21 + 0.05% for banks with assets over $10B — much cheaper than credit.
Your "effective rate" (total fees / total volume) is usually 2.4–3.2% on typical e-commerce, with 85–90% of that being pure interchange + network assessments. Only about 10–15% is your processor's margin.
Why multi-brand operators care
Interchange follows the charge, not the account. Running 4 brands on 4 processors doesn't change interchange one cent — you pay the same network fees. What it does change is your ability to negotiate margin with your processor. Consolidated volume on one parent merchant account gives you more pricing leverage on the margin portion, even though interchange itself stays constant.